Learning the Essentials of Business — Part II

Prototyping with numbers & the business value of design

Session II: Prototyping with Numbers

Going into the second session of the workshop, I felt pretty clueless. Luckily, that feeling didn’t last long! We were introduced to the concept of financial prototyping at three levels:

  • Business Level: How might we estimate profitability?
  • Feature Level: How might we estimate ROI?

Market-level prototyping

Prototyping at the market level involves a simple framework around guestimation and TAM. Total addressable market or TAM references the revenue opportunity available for a product or service. A new company would (or should) estimate the market potential for its product or service. It’s one way the company can further validate their value proposition.

A diagram gives context around TAM.
  • Bottom-Up: Look at subsets of a localized situation, then extrapolate the results to the wider market opportunity
  • Third-party research: Draw data and insights from other companies like Forrester
  • Value theory: Focuses on the positive value and features derived from an innovative new offering versus incumbent options

Business-level prototyping

Business-level prototyping is about estimating profitability. Sounds like a nightmare, right? Couldn’t agree with you more. But, our facilitators dropped some science on us. Think of it as working from a sketch to a wireframe, and finally a prototype. Look at it as moving from simple equations and progress into complex financials.

Sample financial model for a lemonade stand

Feature-level prototyping

You: “I think we should redesign the checkout flow, button, and styles.”
PM: “I’m not sold on the idea.”

Formula for calculating ROI

Session III: Business Value of Design

And finally, we’ll unpack business value. What do people value? Maslow’s hierarchy of needs says that human needs rely on physiological needs are met first. They are the foundation for everything else.

Maslow’s Hierarchy of Needs

Case Study: Airbnb

Airbnb’s mission is: belonging anywhere. Benjamin Evans, Inclusive Design Lead, and his team focus on how to make traveling with Airbnb more accessible and inclusive for all.

  • Travel segment growing 22% per year, outpacing other segments
  • Unhappy guests mean an increase in customer support tickets, churn rate, and negative stories online
  • Save money by decreasing customer support tickets and increasing retention
  • Reduce risks by avoiding pr/brand costs to inaction
  • 40 people across product, design, research, & legal collaborated to build
  • More people feel a sense of belonging within the airbnb community
Redesign of Airbnb’s search feature

Takeaways

So that was a LOT, wasn’t it? I felt that way too, especially during the Prototyping with Numbers session. This workshop stretched me beyond the bounds of design and it felt empowering!

  • The business model canvas can inform strategy, tactics, and tradeoffs, influencing business decisions
  • Collaborating with your key stakeholders improves with a shared vocabulary, helping create alignment
  • Supporting your decisions with data and dollars meaning greater influence on product direction
  • Aligning the value of your design work with the business goals drives the

Resources

Interested in experiencing the workshop first hand? Take a look at what Designer Fund has to offer:

  • Coursera has tons of course and certificate options
  • Udemy has a handful of classes that may get the job done
  • edEx has a certificate course for business fundamentals

Digital product designer at Dialexa, advocate for BIPOC, speaker, and hustler.